New York, October 07, 2013 -- A scenario in which BlackBerry Ltd. exits the smartphone handset
market would be credit negative for its major manufacturing partner,
Jabil Circuit Inc., and distributor, Brightstar Inc.,
but would not affect either of those company's ratings, Moody's
Investors Service says in a new report. With Jabil looking to end
its manufacturing relationship with BlackBerry and BlackBerry's
reporting a $965 million net loss in the second quarter,
and given that the handset market requires significant scale to be competitive,
Moody's believes the probability that BlackBerry Ltd. will
quit the handset market is growing.

"If BlackBerry exits the handset market, we estimate that
Jabil Circuit would lose around $2.1 billion in revenue
in the first year and Brightstar about $1.2 billion over
12 to 18 months, but these declines would not affect the companies'
ratings because both have reduced their exposure to BlackBerry over the
past few years," says Senior Vice President, Gerald
Granovsky in "Supply Chain Revenue Would be Pressured by BlackBerry
Potential Handset Exit."

Jabil has been decreasing its exposure to BlackBerry by reducing production
of the latter's handsets, Granovsky says. And while
BlackBerry accounted for around 30% of Brightstar's total
sales in 2011, that figure is now down to about 19%,
and is still declining.

Moody's believes Jabil will end its relationship with BlackBerry
as soon as practicable, while Brightstar and other mobile distributors
such as Tech Data Corp., Ingram Micro Inc. and Intcomex
will continue to distribute BlackBerry handsets as long as the devices
are available.

"Jabil has been looking to reduce its dependence on the tech sector
for revenues, while disengagement with BlackBerry would also eliminate
uncertainty around production requirements and alleviate the need to devote
capital resources to a partnership with an uncertain future,"
Granovsky says. "Further, we concur with Jabil that
it will still be able to generate about $1 billion in operating
cash flows in fiscal 2014."

Selling off its remaining inventory should boost Brightstar's free
cash flow in the near term, Moody's says. BlackBerry
handsets remain popular in some countries in Latin America, such
as Argentina, and the region is a key selling region for the company.
Once Brightstar's existing supply is sold, it would take on
additional product only on a pre-sold basis. Ultimately,
however, Brightstar's rating and outlook will depend on its
ability to improve profitability, and to grow its value-added
products for the mobile device industry.

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